WGI Heavy Minerals Completes Sale of Investment in Transworld Garnet Indiaadmin
WGI Heavy Minerals, Incorporated announced that it has completed the sale of its investment in Transworld Garnet India (Pvt) Limited (TGI). The sale consists of WGI’s 74% equity interest in TGI and the repayment of debt financing.
WGI has repatriated from India US $4.85 million in cash for its 74% equity interest in TGI. In addition, WGI has repatriated US $10.0 million in debt financing by obtaining repayment of certain external commercial borrowings (“ECB loans”) from TGI. Due to the lengthy process involved in obtaining approval from the Reserve Bank of India for the repayment of ECB loans, WGI incurred exchange losses of approximately US $1.14 million on the sale proceeds from the time the funds were deposited in an escrow account on August 14, 2008 by the buyer of its investment in TGI and the release of the funds on September 12, 2008. During this period the Rupee weakened significantly against the US Dollar. A further Rupees 28.7 million (approximately US $625,000) remain in an escrow account in India which funds will be used to repay additional debt financing owed to WGI. The repayment of the remaining debt is also subject to approval by the Reserve Bank of India.
The sale marks the beginning of WGI’s three-year distribution agreement with V.V. Mineral covering garnet, ilmenite and other minerals that may be present in the beach sands mined by V.V. Mineral. The agreement provides WGI with an assured minimum supply of 60,000 metric tons of garnet annually, which is a significant increase over current production rates. Garnet grades and quality levels will be consistent with material currently supplied to WGI by TGI, and additional quantities of garnet will be supplied as V.V. Mineral’s capacity expands. In addition, WGI will act as a broker for the sale of V.V. Mineral’s ilmenite products.
“The regular and predictable supply of garnet through our new distribution agreement with V.V. Mineral gives WGI’s operations the potential for growth in our core business, mineral distribution,” said Greg Emerson, Chief Executive Officer of WGI. “The agreement makes us stronger strategically, allowing us to leverage the strength of our alliance with V.V. Mineral and the proven success they have had in producing garnet and other heavy minerals in India” added Emerson.
With the successful sale of WGI’s Indian assets, the terms of the employment contract of Mr. Covell D. Brown, WGI Chairman, are fulfilled and Mr. Brown has therefore ceased to be Chairman of the WGI Board. He continues as a Director.
WGI Heavy Minerals, Incorporated is a marketer of industrial grade minerals sourced primarily out of India, producer of industrial-grade garnet out of Idaho and Germany and manufacturer of replacement parts for ultra-high waterjet cutting systems in the U.S. The Company’s shares are listed on the Toronto Stock Exchange under the symbol WG.